In the Washington State lawsuit, what was Jersey Mike's accused of violating?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
ITEM 3. LITIGATION
The State of W ashington v. Jersey Mike's Franchise Systems, Inc.; Auburn JM, LLC; BCG-Northwest, LLC, Berry Investment Group, Ltd.; Elsterly, LLC; FM Restaurants, Inc.; Food Adventures, Inc.; Golden Springs, LLC; JM Northtown, LLC; JM Puyallup, Inc.; JM Restaurants, Inc.; JM Silverdale, LLC; JM Spokane, LLC; Larson & Associates, LLC; Majestic Eagle, LLC; Patrikor Corp.; Red Polo Ventures, LLC; Tin Star Subs, LLC; Trieb, LLC; Doe 1; Doe 2; Doe 3; Doe 4; and Doe 5, Case No. 18-2-25822-7 (State of Washington King County Superior Court, Oct. 15, 2018). On October 15, 2018, the State of Washington, through its Attorney General, sued JMFS, and each of its franchisees owning restaurants located the State of Washington ("Washington Franchisees"), alleging that JMFS and Washington Franchisees violated the Washington Consumer Protection Act based on the former inclusion in legacy franchise agreements of a so-called 'no-poach' provision prohibiting franchisees from soliciting or hiring JMFS's and other franchisees' current employees. Prior to the complaint's filing, JMFS had publicly announced that it would not enforce the provision in all existing franchise agreements nationwide and had removed the provision from its form franchise agreement. In addition, JMFS amended all of its franchise agreements for re staurants located in Wa shington. To resolve the di spute, JMFS and the State of Washington entered into an Assurance of Discontinuance on August 23, 2019, which required JMFS to continue its franchising practice by not including the 'no-poach' provision in a ny future franchise agreements and to refrain from enforcing the provision in any existing franchise agreements. Further, JMFS
agreed to pay the State of Washington $150,000 without admitting to any fact, liability, misconduct or wrongdoing on JMFS's part.
Other than the above action, no litigation is required to be disclosed in this Item.
ITEM 4.
Source: Item 3 — LITIGATION (FDD pages 13–14)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, a lawsuit was filed by the State of Washington against Jersey Mike's and its franchisees in Washington. The lawsuit, filed on October 15, 2018, alleged that Jersey Mike's and its Washington franchisees violated the Washington Consumer Protection Act. The accusation stemmed from the inclusion of a 'no-poach' provision in older franchise agreements. This provision restricted franchisees from soliciting or hiring current employees of Jersey Mike's or other franchisees.
Prior to the filing of the complaint, Jersey Mike's had already announced that it would not enforce the 'no-poach' provision in existing franchise agreements nationwide and had removed the provision from its standard franchise agreement. Additionally, Jersey Mike's amended all franchise agreements for restaurants located in Washington.
To resolve the dispute, Jersey Mike's and the State of Washington entered into an Assurance of Discontinuance on August 23, 2019. This agreement required Jersey Mike's to continue its franchising practice without including the 'no-poach' provision in future franchise agreements and to refrain from enforcing the provision in any existing agreements. Jersey Mike's also agreed to pay the State of Washington $150,000, without admitting any wrongdoing.